Program Review and Investigations
Committee

Minutes

<MeetMDY1>May 13, 2004

The<MeetNo2>May 13, 2004 meeting of the Program
Review and Investigations Committee was held at<MeetTime>10:00 AM, in<Room>Room
131 of the Capitol Annex. Greg Hager, Committee Staff
Administrator, called the meeting to order, and the secretary called the roll.

Dr. Hager explained that the first order of business would
be the election of committee co-chairs.

Rep. Charlie Hoffman was nominated as House Co-chair of the
Program Review and Investigations Committee, upon motion made by Rep. Palumbo
and seconded by Rep. Arnold.

Rep. Charlie Hoffman was elected as House Co-chair by
acclamation, without objection, upon motion made by Rep. Thompson and seconded
by Rep. Butler that nominations cease and that he be elected by acclamation.

Sen. Katie Stine was nominated as Senate Co-chair of the
Program Review and Investigations Committee upon motion made by Sen. Borders
and seconded by Sen. Guthrie.

Sen. Katie Stine was elected Senate Co-chair by acclamation,
without objection, upon motion made by Sen. Seum and seconded by Sen. Guthrie
that nominations cease and that she be elected by acclamation.

Minutes of the December 17, 2003 meeting were approved,
without objection, by voice vote upon motion made by Rep. Baugh and seconded by
Sen. Guthrie.

Rep. Hoffman also welcomed new staff members Van Knowles and
Rick Graycarek.

Tom Hewlett, Program Review staff, presented an overview on
the report Human Service Transportation Delivery: System Faces Quality,
Coordination, and Utilization Challenges. He stated that the program began as
an Empower Kentucky project in 1998, with the intent to limit cost growth and
control the fraud and abuse that was reported to be prevalent in the previous
nonemergency Medicaid transportation program. Mr. Hewlett explained that under
the Human Service Transportation Delivery (HSTD) program, each broker received
a payment for each Medicaid recipient in his or her region, and that the
payments varied by region from about $5 to more than $8 per month. He stated
that in exchange for the payments, the brokers operated nonemergency
transportation programs in the 15 regions of the state. He said that the
network of regional brokers contracting with the state under a capitated
payment system appeared to be successful in containing cost growth. He also
stated that incidents of fraud and abuse were much less evident in the HSTD
program.

Rep.
Arnold asked if there was a specific reason for the large increase in the
number of annual trips between 1998 and 2003. Mr. Hewlett replied that in
1998 there was only one broker operating; the rest of the state still used the
voucher system. He said that the number of trips increased as the broker system
was phased in. In 2001/2002, the program began to stabilize, and the rate of
cost growth had been restrained and the cost per trip had been decreasing.

Sen.
Stine asked for clarification regarding the actual growth rate. Mr. Hewlett
stated that the rate of growth had been hard to determine because Region 6
(Louisville area), which has a large population of eligible riders, came into
the program in 2002. Shortly thereafter, the broker for Region 6, CTG, declared
bankruptcy. A new broker for Region 6 did not come back online until May 2003.
He said that it would be another year or two before staff could get an actual
estimate on the rate of growth in trips.

Sen.
Stine asked if staff had been able to determine a growth rate for the rest of
the state, excluding Jefferson County.

Mr.
Hewlett stated that staff would provide that information to the committee.

Mr.
Hewlett explained that each regional broker contracted with transportation
providers in his or her region in order to provide transportation to eligible
recipients. He said that the brokers operated call centers taking requests for
trips and then allocated those trips to the different transportation providers
in their region. He stated that some brokers also provided transportation
services.

Mr.
Hewlett stated that HSTD primarily served Medicaid recipients who did not own a
car. The program also included patients who could walk from the taxi or the
car into the doctor’s office without assistance, non-ambulatory patients, and
those who were confused as to date and location. He stated that the program
also served a small number of clients for the Department of the Blind and the
Department for Vocational Rehabilitation. He said that the program did not
provide stretcher or emergency services.

He
stated that the managed care approach had been adopted as a cost-saving
measure, so it was important that monitoring occur to ensure that the quality
of services was not adversely affected.

Sen.
Stine asked if the brokers who also provided transportation were in competition
with other transportation providers. Mr. Hewlett stated that the brokers who
provided transportation would have to have a contract with other providers in
the system.

Sen.
Stine asked if staff was able to determine if the brokers who were also
operating as providers had any advantages over other providers in the region.
Mr. Hewlett stated that the report contained a recommendation asking HSTD to
improve their data collection efforts in order to address that issue
accurately.

Rep.
Baugh asked what was the incentive for a non-profit agency to reduce its costs.
Mr. Hewlett stated that if a non-profit agency reduced its costs, then it would
get to keep anything above operating costs, which could be reinvested in
equipment or facilities.

Rep.
Baugh asked if a non-profit agency could authorize a governing body or another
entity to do the same thing. Mr. Hewlett stated that they could do that, but by
reducing their operating costs it would allow them to generate extra revenue.

Rep.
Baugh asked if the bid specifications for a non-profit agency and a for-profit
agency were the same. Mr. Hewlett explained that each region was required to go
through an RFP process.

Rep.
Baugh asked if there was a requirement for bonding on bid contracts. Mr.
Hewlett stated that there was not a requirement for bonding.

Rep.
Baugh asked if the lack of bonding was unique to the HSTD program. Mr. Hewlett
stated that he did not know the answer to that question.

Sen.
Stine asked if the report contained a recommendation to require bonding, and,
if not, why. Mr. Hewlett stated that bonding had not been mentioned as an issue
with persons that staff spoke with, nor did the issue come up in any of the
surveys. He said that there were some bonding issues surrounding the bankruptcy
of CTG in Region 6, which was an unique case.

Sen.
Stine asked that if CTG had been bonded, would it have ensured that the people
who were owed money got paid. Mr. Hewlett stated that bonding could have made a
difference. He stated that other states had tried to obtain bonding, but
because of the unknown quantity in the number of trips provided per month, they
were unsuccessful in finding a company that would provide bonding. He said that
a recommendation to include a bonding clause in the contract could be included
in the contract if the committee requested the recommendation.

Ms.
Shepherd stated she had contacted several bonding companies, but no company
would provide bonding.

Ms.
Bourne stated that companies refused to bond because the cap payment received
each month by the broker was an unknown number.

Rep.
Baugh stated that he thought bonding would alleviate problems experienced in
the past with brokers who were either not paying the providers or delaying
payment for long periods of time.

Ms.
Bourne stated that was a problem for the previous broker in Region 6. The
subcontractor did not get paid.

Rep.
Baugh stated that he was referring to Region 5.

Ms.
Bourne stated that HSTD would continue making inquires of bonding companies.

Mr.
Hewlett stated that in order to ensure the quality of services, staff
recommended that HSTD conduct a more comprehensive survey to include more
individuals and more regions. He also said that the telephone complaint line as
well as the field and phone surveys appeared to be weak in identifying specific
concerns. He stated that the report recommends the HSTD program to institute a
quality improvement plan so that program managers could identify short-term and
long-term targets for improvement. The plan would also show how quality
monitoring and utilization measures could be used to improve the system.

Mr.
Hewlett explained that Program Review staff had developed and circulated a
client satisfaction survey of Medicaid recipients who had used the HSTD program
within the first half of 2003. He said that the survey revealed that 43 percent
of the riders indicated that they were satisfied and 45 percent of the riders
indicated that they were very satisfied with the program. He stated that the
survey also indicated that 25 percent of the riders did not know that they had
a right to file a compliant. More than half of the remaining clients did not
know how to file a complaint. He stated that the lack of understanding of the
complaint process could affect services. He cited as an example the fact that
better awareness of the complaint process would have likely resulted in more
legitimate complaints about the 72-hour requirement for phoning in requests for
rides. Exceptions to the rule are allowed, but he stated that staff’s survey
revealed that some of the trip requests may have been inappropriately denied.

Mr.
Hewlett said that the report recommended that:

·Medicaid
Services and OTD should ensure that rider satisfaction surveys and survey
methodology are redesigned to obtain valid, generalizable results;

·Medicaid
Services and OTD should develop a quality improvement plan;

·OTD should
maintain a database of the number and types of errors, with brokers held
accountable for the accuracy of the data they submit; and

Mr.
Hewlett said that the inefficiency of grouping of trips remains a problem in
some regions. He stated the Program Review survey indicated that some providers
were still concerned about distribution of trips by brokers. He said that
providers were concerned that some brokers could be shifting higher paying
trips to their own business or to their favorite providers. He said that House
Bill 488 allows the freedom of choice rule for category 07 (disoriented) and 08
(nonambulatory) recipients. Rather than having a regional broker assign the
trip, those recipients get to choose who will provide transportation services
to them. Besides limiting the broker’s ability to efficiently coordinate trips,
these types of trips are generally paid at a higher rate, making these trips
more desirable.

He stated that the report offered
three recommendations to improve the coordination of services:

·The Office of
Transportation Delivery should examine the current rate structure for
transportation providers in conjunction with representatives of brokers and
transportation providers. 603 KAR 7:080(17) provides criteria for
transportation provider rate setting which should be uniform, simple, adequate
and provide incentives for efficient grouping of trips.

·The Office of
Transportation Delivery should periodically survey transportation providers to
determine if they feel rides are being properly scheduled and equitably
distributed.

·Any decision to
alter the freedom of choice rule should be predicated on maintaining or
improving the current level of quality in the HSTD program. However, to ensure
that the freedom of choice rule is not being abused, encounter data should be
periodically examined for regions with higher numbers of single passenger trips
and regions in which the broker has a substantial percentage of disoriented and
non-ambulatory passengers. If OTD determines that the freedom of choice rule
is being abused or having particularly negative effects on the region, OTD
should intervene by performing an independent review of 07 and 08 provider
selections.

Rep.
Palumbo asked why there would be 15 or more riders in a vehicle, and were they
all eligible recipients. Mr. Hewlett stated that it was normal to have large
groups from Adult Day Care centers to ride in a van that could seat 15 people.
He stated that all 15 riders should be Medicaid eligible recipients who are a
part of the program. He did say that on occasion there might be an escort involved,
especially if a recipient was confused and needed additional assistance.

Rep.
Palumbo asked if escorts were unable to drive or did they have a vehicle but
chose not to use it to transport an eligible recipient. Mr. Hewlett explained
that in order to be eligible for the program, a recipient could not be in
possession of a vehicle. If an escort who lives with an eligible recipient has
a vehicle, then technically that recipient would not be eligible for the
program.

Rep.
Palumbo asked if a recipient would be eligible for the program if the escort
owned a car, but did not live at the residence with the recipient. Mr. Hewlett
stated that type of situation would be in the gray area of eligibility. He
stated that the statute refers to ineligibility only if the recipient has a
vehicle at the home.

In
continuing, Mr. Hewlett stated that the steady increase in system usage was a
concern. He stated that Kentucky’s population was aging at a faster rate than
the national average, which could have long-term implications for the HSTD
utilization rate. He stated that recipients served by Adult Day Care and
Supports for Community Living (SCL) waiver programs were relatively heavy users
of the system.

Rep.
Palumbo stated that she would like to know at some point the financial
consequences of Adult Day Care centers owning their own transportation
vehicles.

Mr.
Hewlett stated that another issue addressed in the report was the
administrative structure of the program. He stated that because new broker contracts
were to be negotiated before July 2005, staff recommended examining the
distribution of regions by usage rates, and geographic and demographic
similarities. He said that in examining other states, staff found that Georgia
operates a similar brokerage system, but only had five regions.

Mr.
Hewlett stated that communication between the Department for Medicaid Services
and the Transportation could be improved. He said that OTD had not been
furnished with a list of covered services from Medicaid, and that the brokers
were requesting guidelines for providing escort services to recipients who were
in need of escorts. He also stated that Medicaid should share projections of
the SCL population to the Transportation Department for planning. He said that
OTD should examine the administrative cost controls used in other states, and
those controls most relevant to Kentucky should be adopted.

Mr.
Hewlett said that the report offered three recommendations to control and
contain future cost growth:

·The Office of
Transportation Delivery, working in cooperation with the appropriate Health
Services Cabinet division, including the Department for Medicaid Services,
should gather and examine data on usage by service providers who also provide
transportation services.

·Transportation,
Medicaid Services, and other interested parties should examine the distribution
of regions across the state. Reducing administrative costs should be a goal in
any such regional adjustment, but this should be balanced against the need to guarantee
the overall quality and effectiveness of the system.

·Officials of
the Office of Transportation Delivery and the Department for Medicaid Services
should consult with their counterparts in other states to determine the
cost-control measures that would be practical for Kentucky’s capitated system.

Mr. Hewlett stated that officials with the Department of
Medicaid Services and the Office of Transportation Delivery had not disagreed
with any of the report’s recommendations and both agencies had started implementing
the recommendations.

Rep. Hoffman stated he was pleased that the agencies were
responding to the report and to the recommendations.

Rep. Arnold asked what would happen if a broker did not
have enough money to cover the high increase in the number of eligible
recipients. Mr. Hewlett stated that in the short term, the broker would have to
absorb the costs. He stated that there is a provision that if there was a large
increase in the SCL population within their region, then the broker could apply
with the OTD for an adjustment.

Sen. Stine asked OTD what recommendations were being
implemented as a result of the report, and also, how did the Office of
Transportation Delivery feel about the recommendation regarding the merging of
regions.

Ms. Stoops stated that OTD had been able to operate the
program for the last four years, using the same amount of dollars, for more
transportation services.

Ms. Bourne stated that Kentucky’s program was being used as
a model nationally. She stated that OTD would be examining the possibility of
merging some regions. She said that OTD had been working, per the
recommendations, on improving the rider surveys and the quality improvement
plan. She said tracking error data and matching brokers’ financial statements
against encounter data have been implemented. She explained that the survey for
providers would be in place by the end of the year; a new form had been
developed requiring that recipients in all brokerages complete the form for
proof of their freedom of choice rule; OTD will be imposing caps for all
regions statewide with transportation providers that also provide Medicaid
services – effective July 1, 2004 for the FY 2005 year; and Transportation and
Medicaid Services are examining the current distribution of regions and should
have recommendations for FY 2006 (all regions will be rebid for services for FY
2006).

Sen. Borders asked if it would be more feasible for a
person to pay a private individual $5 for a trip to the doctor, rather than
having to use an ambulance costing $200. Ms. Stoops stated that there were
rules regarding the use of an ambulance for transportation, and unless it was
unsafe for him to ride in a taxi or a transit bus, then he should not be using
an ambulance as a form of transportation. She said he could use the Human
Service Transportation Delivery program much cheaper than paying for an
ambulance.

Sen. Borders asked if OTD could give the man a voucher so
he could pay the private individual transporting him to the doctor. Ms. Stoops
stated that a broker could enroll a private individual as a private auto
provider, and then that individual could be paid the state mileage rate.

Rep. Thompson asked if the recent increase in gasoline
prices would cause complications in the program.

Ms. Bourne stated that gasoline prices would cause a
problem. She said that the program’s budget had zero growth in the last three
to four years, and it was painful for the providers and the brokers.

Ms. Stoops stated that the brokers would need to calculate
the increase in gasoline prices and bid for contracts accordingly.

Rep. Thompson asked if OTD was projecting losses of brokers
and providers as a result of high gasoline prices. Ms. Stoops stated that
Medicaid, as an optional service, must provide transportation services. She
said that OTD should be able to continue to do that, but it was not known if
the department could still provide the same level of services at the current
rate of $48 million a year.

Rep. Thompson asked if it was realistic to think that the
OTD could continue providing the same level of services for the current budget
of $48 million.

Ms. Stoops stated that she felt there was still room within
the program to find more efficient ways of cutting costs.

Ms. Shepherd stated that one of the contractors in her
region was putting in a new computerized system that should help coordinate
trips and eliminate individual trips by grouping recipients together. She
stated that subcontractors were experiencing financial difficulties because of
the increase in gasoline prices.

Ms. Bourne stated that money had been getting tighter for
the last two years, and if it continued to get tighter then something would
have to give.

Rep. Baugh asked if the program could pay for out-of-state
trips.

Ms. Bourne stated that the program could pay for
out-of-state trips within a 100 mile radius outside the border.

Rep. Baugh asked if it was true that you could take a
person 150 miles to a hospital in Kentucky, but could not take that same person
50 miles to a hospital in another state. Ms. Bourne stated that there are times
when operating authority becomes an issue. She stated that Kentucky’s
operators could go into another state, but sometimes they cannot pick up. She
stated that Kentucky had been able to work with Ohio, but not with Tennessee.

Rep. Baugh stated that the doctors in his area routinely
send patients to Nashville, and it was not uncommon for his folks to have their
primary care physicians in the Nashville area.

Ms. Stoops stated that they were aware of the out-of-state
problems and the department intended to look further into reciprocity with
border states. She stated that out-of-state trips could be done if the round
trip totaled 100 miles, and that the person was brought back.

Rep. Baugh asked if the program worked with VA hospitals.
Ms. Stoops stated that transportation was provided for all Medicaid services
regardless of whether it was to an enrolled provider.

Rep. Butler asked why there was such a big difference in
utilization rates throughout the regions. Ms. Bourne explained that Region 5
had many Adult Day Care centers and Supports for Community Living programs;
Region 16 has very few.

Rep. Palumbo asked if recipients were required to use
accessible public transportation if available. Ms. Bourne explained that brokers
could coordinate bus passes.

Sen. Borders asked what the Department of Medicaid Services
would do if the costs of the program continued to increase for the Adult Day
Care and Supports for Community Living populations.

Ms. Stoops stated that issue would have to be addressed at
the federal level.

Ms. Bourne stated that there could be small ways to reduce
the costs such as reducing services from seven days a week to five days a week.

Rep. Hoffman asked Mr. Hewlett for clarification on why the
Adult Day Care usage was increasing, and what did the report recommend for
controlling that cost. Mr. Hewlett stated that the report recommended that OTD
put a cap on the amount that could be paid to a provider, per month or per
day. He said that OTD had already implemented the recommendation, and caps
would be effective July 2004.

Rep. Hoffman asked why Georgia was used an example in
comparing Kentucky’s program to other states, and how could Kentucky benefit
from reducing the number of regions. Mr. Hewlett stated that Georgia’s broker
system is similar to Kentucky’s, and that they also have rural areas,
metropolitan areas, and some mountainous areas. He said that staff wanted to
show that a brokerage system could be done with fewer regions with some savings
to administrative costs. He said it was important that any restructuring of
the regions be done without jeopardizing the satisfaction rate and services.

The report Human Service Transportation Delivery: System
Faces Quality, Coordination, and Utilization Challenges was adopted by roll
call vote, upon motion made by Rep. Baugh and seconded by Sen. Borders.

Rep. Hoffman reminded the committee that staff is currently
working on four studies: Kentucky Transitional Assistance Program (K-TAP);
Uncollected Revenues and Improper Payments; Adult Protective Services, Phase
II; and Improper Computer Use by State Employees.

Rep. Arnold stated that he had received several telephone
calls recently regarding the Underground Storage Tank problem. He said that
there did not seem to be any closure for the folks who had removed their
storage tanks over six years ago. He asked that the committee consider the
issue as a study topic if no other committee was looking into the problem.